NEW DELHI: HDFC Chairman Deepak Parekh said on Thursday that demand for housing units in India continues to remain robust and a minor increase in interest rate will not have an impact on the demand for home loans.
“The India real estate market is on an upward cycle which bodes well for all of us. The big star of the real estate sector continues to remain residential housing in India. I hardly need to reiterate that demand for housing in India continues to remain robust,” Parekh said while addressing the CII Real Estate event.
According to Parekh, the demand for housing continues to be from both first-time homeowners as well as those moving up the property ladder — generally into larger homes or houses in other locations. He added that in his over 50 years of work-life, he has not seen housing affordability better than where it is today in India.
Commenting on the interest rates on homes loans which is expected to go up in near future, the veteran banker said, “We have seen home loan rates as high as 17-18% in the past. Today, interest rates are still at historic lows, so a minor increase will not have an impact on the demand for home loans.”
However, many in the industry have concerns that if the central bank decides to increase the repo rate, it may have a negative impact on housing demand as increase in commodity prices have already made housing units expensive in select markets.
According to a CII-ANAROCK survey released on Thursday, 56% of respondents expects housing prices to rise in 2022 due to inflationary trends in construction raw materials and overall operational costs for developers. The survey, conducted between July and December 2021, polled 5,210 participants via various digital platforms across tier 1, tier 2, and tier 3 cities.